Spotlight on the Social Economy Action Plan

Why the Action Plan matters

The social economy prioritises social and environmental well-being over profit maximisation. This approach resonates not only within the European Union, through the European Pillar of Social Rights and its Action Plan, but also aligns with global imperatives outlined in the 2030 Agenda and the Sustainable Development Goals (SDGs).

The EU Social Economy Action Plan, led by the European Commission, marks a significant breakthrough in recognising and harnessing the potential of the social economy. Through a comprehensive set of measures, the Action Plan aims to create an enabling environment for the social economy to thrive. 

Social investors, social enterprises, and social associations play a crucial role as key contributors to achieving a just and green transition, serving as indispensable entities in fulfilling the promises of the Social Economy Action Plan. The Action Plan and its Council recommendation aim to promote sustainable, fair, and inclusive growth across the EU.
 

Key components 

Strategic Focus: The Action Plan strategically positions the social economy as a driver for a sustainable, fair and inclusive future. The plan seeks to unlock the full potential of the social economy by fostering an ecosystem conducive to its growth.

Social Investment Enhancement: Recognising the importance of social investment, the Action Plan catalyses financial support. It aims to facilitate the initiation, expansion and innovation of social enterprises, contributing to job creation across the European Union.

Policy and Legal Frameworks: A critical dimension of the Action Plan is its emphasis on creating tailored policy and legal frameworks. The Plan acknowledges the need for adjustments in taxation, public procurement and state aid frameworks to align with the unique requirements of the social economy.
 

Milestones 

13 June 2023: the European Commission advanced the social economy by proposing a European Council recommendation. The recommendation aimed to guide member states in enhancing their social economy framework conditions and  adapting their public policies and legal frameworks to bolster social economy activities, especially in less developed areas. The proposal also addresses the need for adapting administrative and institutional structures to effectively support these entities and foster meaningful engagement with stakeholders in the sector. This initiative reflects a strategic and comprehensive approach towards promoting the social economy and ensuring its sustainable growth across member states.

27 November 2023: the European Council officially endorsed the European Commission's proposal for developing social economy framework conditions. This endorsement is crucial in empowering all member states to tailor their national policies and laws, aligning them more closely with the distinctive requirements of the social economy.  The endorsement signals a coordinated approach at the European level, reinforcing the commitment to fostering the social economy and a unified commitment to advancing its agenda within the European Union.
 

Council recommendations 

1. Enabling Social Finance:

• Map financing structures.
• Assess support schemes.
• Tailor financing for social entities.
• Explore innovative schemes.

2. Supporting Social Value:

• Ease labour market access.
• Enhance working conditions.
• Ensure public support.
• Foster collaborative projects.

3. Impact Measurement Practices:

• Integrate impact measurement in policies.
• Provide tailored support for methodology adoption.

4. Promoting Social Innovation:

• Facilitate cooperation and partnerships.
• Create social innovation hubs.
• Involve entities in local development.
• Engage with competence centers.
   

How these recommendations shape the impact ecosystem

1. Enhancing access to finance and market opportunities: The Council encourages member states to improve the accessibility of social economy entities to markets by promoting socially responsible public procuremen.t Such is the case with EGAS, a public procurement body of health services on behalf of Friuli Venezia Giulia, delivering mental health services through social cooperatives.  The Council advises collaboration between social economy entities and mainstream businesses.  In addition, member states should bolster access to both public and private funding for the social economy by cultivating social finance ecosystems and leveraging available funding sources, including EU funds.

2. Empowering social innovation: The Council urges member states to enhance the role of social economy entities in promoting social innovation within crucial sectors of local development and employment. Member states can facilitate place-based innovation by fostering cooperation and partnerships among social and circular economy entities, mainstream businesses, finance providers, local governments and other stakeholders.

3. Social impact measurement and management: member states should actively support social economy entities in adopting robust social impact measurement and management processes. These processes play a crucial role in evaluating and assessing the social impact of specific projects and organisations, providing a comprehensive understanding of their contributions. The Commission will help member states develop social impact measurement and management by mapping and reviewing current practices. This includes understanding how these practices meet the needs of social economy entities, aiming to encourage their use. 

4. Promoting awareness through data, research and statistics: The Council advises member states to raise awareness about the social economy in a fact-based way. This can be done by continuously monitoring the evolution and performance of the social economy through comprehensive research, data collection and the generation of informative statistics.

5. Ensuring taxation systems facilitate social economy growth: member states should ensure that their taxation systems do not impede the development of the social economy. The Commission will conduct aan analysis of taxation frameworks for the social economy in the member states. However, the Council advises member states to  determine whether their tax systems  are designed to encourage the growth of the social economy. In addition, the Council has recommended ways to enhance cross-border philanthropy, facilitating a more effective flow of resources for social causes across borders. 
 

Impact Europe’s involvement 

As contributors to the creation of the Social Economy Action Plan, we actively participated in its formulation, submitting key articles through a public consultation. Drawing from this experience, we have outlined four crucial recommendations that were included in the Council's recommendation on developing social economy framework conditions. As members of an expert group on social economy and social enterprises (i.e. GECES), we serve as a voice for the impact investing community.

At Impact Europe, we firmly advocate that unlocking the full potential of the social economy relies on engaging impact actors from across the continuum of capital, including philanthropic organisations, foundations, impact funds and financial institutions. Fortifying collaboration between investors and public stakeholders will be necessary.
 

Next steps 

The implementation of the Social Economy Action Plan will last until 2030; it is currently underway in delivering most of its outlined actions. 

The Commission places special emphasis on collaborating with member states, particularly in the formulation and execution of national strategies within a two-year timeframe, as stated in the Council recommendation. 
The Council has urged member states to promptly adopt or update their national strategies for the social economy, committing to monitoring and evaluating progress towards the objectives outlined in the Council recommendation. To ensure transparency and shared learning, member states are required to report their advancements to the Commission within four years of the recommendation's adoption.
 

Central and Eastern Europe Summit

In alignment with these efforts, we're collaborating with The European Microfinance Network, the European Federation of Ethical and Alternative Banks and Financiers, Microfinance Centre, and the ERSTE group to host a Central and Eastern Europe summit,set for October 2024, the summit is meant to prioritise sustainable development alongside economic growth, which includes supporting social entrepreneurship and public and private stakeholders in the social investment ecosystem. The summit aims to enhance policymakers’ understanding of social finance dynamics, fostering closer alignment among them.